Prepare industry before TPP: academic

Staff writer, with CNA

A local economist on Saturday urged Taiwan to intensify efforts to improve its industrial structure in a bid to take on possible challenges it could face if it is able to join the proposed Trans-Pacific Partnership (TPP).

Chu Hao (朱浩), deputy director of the commerce development policy division of the Commerce Development Research Institute (商發院商業與發展政策研究所), said the TPP supports further economic liberalization and advocates more market opening than any other free-trade agreement.

Chu said the TPP has set an even higher bar for market liberalization than the Economic Cooperation Framework Agreement (ECFA) that Taiwan and China signed in 2010.

Entry into the TPP will be crucial to Taiwan’s economic future as the negotiating parties account for about 30 percent of the nation’s total trade, Chu said.

However, he raised concerns that Taiwan may be ill-prepared for the market opening that TPP membership might bring, adding that both the public and private sectors need to transform the nation’s industrial structure and improve the country’s global competitiveness.

National Development Council Minister Kuan Chung-ming (管中閔) said in an interview last week that Taiwan should have a chance this year to join the second round of TPP negotiations.

The TPP currently is being negotiated by the US and 11 other Pacific Rim nations. The first round of talks is likely to be concluded by the end of the second quarter.

President Ma Ying-jeou (馬英九) has reiterated the government’s determination to join the trade pact and the proposed Regional Comprehensive Economic Partnership. He said that Taiwan is seeking support from its trade partners for entry into the trade blocs.

Chu said he expects the TPP’s impact on the local manufacturing sector will be relatively small, as Taiwan’s tariffs on computer and related products have been reduced substantially on the request of the Informational Technology Agreement under the WTO.

However, as companies in the local services and agriculture businesses have been more protected by the government than their high-tech counterparts, these two sectors are expected to face more pressing threats, Chu said.

After taking into account the service sector’s strong opposition to the service trade agreement Taiwan and China inked in June last year, he said that he expects resistance from the sector against the TPP’s requested liberation will be particularly strong.

In addition, Chu said Taiwan should review its laws, in particular laws concerning investment and intellectual property rights, because several negotiating parties in the current TPP talks, such as the US and Singapore, have more advanced regulations in these two areas. Otherwise, Chu said, it will be hard for Taiwan to play catch-up in the global market.